Last year’s federal deficit came in nearly $7-billion lower than the Conservative government projected just a few months ago.
News that the 2012-13 deficit was $18.9-billion rather than the $25.9-billion Ottawa projected in its March budget shows the government is on track to balance the books before the next federal election.
But it also raises questions as to whether the Conservatives are playing politics with deficit forecasts.
“It’s a remarkable miss considering the distance between the time of the budget and the closing of the books,” said economist Finn Poschmann, vice-president of research at the C.D. Howe Institute.
“Surprise upsides make for good politics. It’s a lot better than surprise downsides.”
In opposition, the Conservative Party regularly accused the Liberals of inflating deficit targets to make the government’s actual bottom line look better in comparison.
That concern was a primary reason the Tories created the position of Parliamentary Budget Officer as an independent second opinion on federal finances.
Finance Canada’s year-end report, released Tuesday, lists several explanations as to why the final number came in lower than expected. Revenues were $1.9-billion higher than expected and program expenses were $5.2-billion lower than projected.
Project delays at the provincial and municipal level meant lower spending on infrastructure and corporate tax revenues were higher than forecast.
The report also says federal departments spent considerably less than their approved budgets.
The lower deficit figures help explain why Finance Minister Jim Flaherty has been increasingly confident in his public statements that the federal deficit will be eliminated by the 2015-16 fiscal year.
The government noted that the most recent deficit figure is down by more than one-quarter from the deficit of $26.3-billion in 2011-12 and down by nearly two-thirds from the $55.6-billion deficit recorded in 2009-10.
NDP finance critic Peggy Nash said MPs are being left in the dark when departmental spending is different from the budgets approved by Parliament.
“It is again undermining public accountability of government spending,” she said.
Finance Canada reported that federal revenue as a percentage of gross domestic product is now at 14.1 per cent, down from 18 per cent in 2001.
That figure shows the impact of various tax cuts that have been implemented over the past decade.
Mr. Flaherty said it appears federal departments are taking restraint efforts to heart and are finding new ways to rein in spending.
“This is a good thing. This is prudence not only among the elected people, but among the public officials. I think it’s a very good development for taxpayers in Canada,” he said.
Mr. Flaherty said despite the improved budget numbers, he will not be able to balance the books a year ahead of schedule in 2014-15.
“I wish,” he said. “But we’re not that close.”
- Is Stephen Harper still a conservative?
- Bigger CPP would be better
- Flaherty’s meeting with economists points to possible mid-November update